The tax legislation raises concerns about tracking the money of Egyptians and foreigners in banks

The headquarters of the Central Bank of Egypt in downtown Cairo (AFP)

The Egyptian government is moving forward with a legislative amendment to the Uniform Tax Procedure Law, which allows the IRS to disclose information to banks for the purpose of exchanging information about bank accounts of individuals and entities between the Egyptian authorities and foreign tax authorities, amid legal and financial concerns about the exposure of local and foreign information. investors’ risks. Disclosure of their financial and banking secrets, which will be published by public officials.

The government submitted the proposed amendment to parliament, and Finance Minister Mohamed Maait confirmed in the draft’s preamble that it aims to help some foreign countries verify the tax transactions of their citizens, indicating that this request is not the first of its kind, as Egypt provides bank information on “foreign nationals” based on the Requests of their countries in accordance with the agreements concluded between Egypt and the countries.

The minister indicated Egypt’s commitment to fight against tax evasion, in accordance with the rules of membership in the Global Forum for Transparency and Exchange of Information for Tax Purposes, established by the Group of Twenty and the Organization for Economic Cooperation, which tends to wealth and financial assets that threaten the income of the forum countries .

The sudden legal amendment caused anxiety in business circles and among bank clients about the government’s real intentions regarding the bill

However, the sudden change in the law raised fears in economic circles and among bank clients about the real intentions of the Government regarding the bill that it requested to be adopted in Parliament during the next month, because economists assessed it as suspicious, because it comes from banks all their clients to update their account information multiple times. , during the past months.

Businessmen are raising questions about the reasoning behind the law, which the government does not want to disclose, while markets are witnessing acquisitions by Arab sovereign wealth funds and foreign investors of companies that work in instant payments and financial services, as well as banking, including “e-finance,” a branch Ministry of Finance for Cash Transactions The acquisition of a 55% stake in Vodafone Egypt by South Africa’s Vodacom and its plans to launch Voda Pay in collaboration with Alipay China’s and the world’s largest digital wallet for providing financial services, loans and payments, mobile and online shopping.

Investors expressed surprise that two days ago the government submitted to the Senate a bill to establish the Digital Egypt Fund, with the aim of encouraging foreign investment, at the same time as a law on disclosure of information on foreign investors that suggests there is a struggle between government agencies over the management of data files on investors and client data. In banks whose supervision must belong to a single supreme authority.

Economist Wael Al-Nahhas tells Al-Araby Al-Jadeed that Egypt is obliged, according to agreements with the US Federal Bank and major countries, since 2015, to achieve financial inclusion and prevent bank transfers for clients who avoid tax in of their countries where they signed. Emirati and Bahraini banks accused by international institutions of facilitating money laundering operations.

Al-Nahhas added that forcing the government to fight money laundering for the benefit of others was not accompanied by a similar insistence on getting the money of Egyptians smuggled by the Mubarak regime, before the January 25, 2011 revolution, noting that good intentions What the government proposed in the draft law is not enough, given that the Authority for its implementation will be the Tax Administration, which means that financial statements of clients of international companies and financial statements of investors will be available for circulation among junior employees.

Wael Al-Nahhas: Legislation needs strict controls that guarantee the confidentiality of accounts and corporate transactions, so that they are not a means of trading them.

And he stresses that the legislation needs strict controls that guarantee the confidentiality of accounts and transactions of companies, so that they are not used as a means of trading them, as are done by mobile phone companies that sell phone numbers and the level of consumption of users, for the benefit of real estate marketing companies, car brokers, travel and the sale of goods, and hound customers 24 hours a day, with no ability for either party to protect consumers from having their private information tracked or to hold accountable those who disclose that information without the customers’ prior permission.

Al-Nahhas continues that tax compliance and financial inclusion implemented by the Ministry of Finance allows tax officials to monitor all the money investors put in banks, company assets and shareholder knowledge, and allows the seizure of funds by the Tax Administration on balances, indicating that the law allows employees to control information channels they use. Banks and the Investment Authority have at home, while the state cannot monitor the investments of its citizens in international companies, which were formed by some businessmen in the Gulf and abroad, in order to escape from state control, despite their local business practices the market.

He also warns of the danger of some Arab countries targeting businessmen, who place their investments in Egypt, seeking economic and political security, while the draft law gives these countries the power to monitor these funds in Egypt, through the Ministry of Finance, which means their ability to control money that comes to the country, and they pay certain investors. To get out of the Egyptian market, if they want to steer the country’s economy in a direction that does not support their whims.

For his part, Ayman Abu Al-Ala, undersecretary of the Human Rights Committee in the House of Representatives, stressed in his interview with Al-Araby Al-Jadeed that the government should commit to establishing guarantees that ensure the confidentiality of Egyptians’ business, in accordance with the constitution , provided that access to all data of companies and individuals, or prosecution to prove tax evasion, through court proceedings.

Abu El-Ela points out that the specialized committees in the Parliament did not reach the government’s project, and that there is an incentive from the representatives to thoroughly discuss it in all its legal aspects and its ability to achieve international obligations, without prejudice. on the rights of depositors and investors.

According to the announcement of the Central Bank, the draft law will not affect the confidentiality of client accounts in banks and transactions related to them

According to the statement of the Central Bank, the draft law will not affect the confidentiality of client accounts in banks and transactions related to them, emphasizing that these data will not be given to anyone, directly or indirectly, except with the written permission of the owner of the account, deposit or trust, or from one of the heirs or custodian of the property. Funds or any of them or from his legal representative, or on the basis of a court or arbitration decision.

The generality of the statement and the financial reports were deprived of the guarantee of information leakage through junior employees, at a time when the government is inclined to generalize the “electronic portal” system that allows employees of the Ministry of Supply to see individuals’ incomes, car ownership and level of income, and allows security authorities to see their bank transactions, and requesting the confiscation of money, through security solutions, which were then legalized by the state of emergency.

A financial expert, who wished to remain unnamed, indicates that despite the central bank’s commitment to the fight against money laundering, whereby information about bank clients is not published without a court order, and under the supervision of a single legal service, some junior employees committed criminal acts of leaking information and some thefts, according to official data For, with the weakness of supervisory bodies, emphasizing that the dissemination of this information through the offices of junior employees increases the risk of revealing dealer secrets, in light of procedures that depend on the goodwill of employees.

Experts fear the law will be the start of a battle between official agencies to monitor individuals’ and investors’ money, between more than one sovereign authority, as happened in China last year, when authorities asked instant payment companies and banks to provide information about the movement of funds and costs to merchants through digital purchase systems, which they have in the possession of the security services and the government, and then took them to control the movement of individuals during the “Covid 19” crisis and the persecution of businessmen, led by the company “Ali Pay”, which should enter Egypt next March.

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